London - Zinc’s everywhere. It helps protect steel from corrosion and our skin from the sun. It makes fireworks sparkle and is even used to treat an upset stomach.
Like many commodities, it’s got a lot cheaper because there’s more of it than we need. That may be about to change after Glencore Plc, the world’s largest producer of the mined metal, said it’s going to cut output by a third. Zinc prices jumped the most since at least 1989 on Friday in response.
China’s slowing economy is suppressing demand for raw materials and that’s creating surpluses of everything from oil to steel, driving down prices. Zinc’s no exception, tumbling almost 20 percent this year in London amid swelling stockpiles.
Glencore’s cutting output as it looks to shore up its finances amid the commodity rout. It says it wants to keep its reserves in the ground amid prices that “do not correctly value the scarce nature of our resources.
” The commodity collapse has roiled the company amid growing concern about its debt burden. Its shares tumbled 29 percent in a single day last week before rebounding as it sought to reassure investors.
The day before Glencore’s announcement, Goldman Sachs Group predicted that refined zinc supply will outpace demand by 50 000 metric tons this year and 51,000 tons in 2016. Glencore’s cuts in Australia, South America and Kazakhstan will remove 500, 000 tons a year from mined supply, potentially tipping the market into a deficit and giving a boost to prices of the multipurpose metal.
Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director at Glencore.
BLOOMBERG